Meme Coins Face Ups and Downs as Exchanges and Market Makers Profit From the Frenzy

Meme coins, the fun and often humorous cryptocurrencies that took the internet by storm, have had a rocky start this year.

Meme coins, the fun and often humorous cryptocurrencies that took the internet by storm last year, have had a rocky start this year.

According to a recent Kaiko report, most meme tokens have struggled, with losses ranging from 10% to as much as 70% since the beginning of the year. But does this mean the meme coin frenzy is over? Not quite.

Meme Coins Face Ups and Downs

Kaiko’s recent report highlights that while popular meme tokens like Dogecoin, Shiba Inu, and newer coins have seen significant price drops this year, their popularity hasn’t faded completely.

Last year, these tokens outperformed many other cryptocurrencies thanks to their hype and the chance of making quick profits.

This year, despite the volatility, the recent surge in new meme coin launches, particularly on Solana, is evidence that traders continue to engage with these assets, betting on the next viral success.

Meme coins also faced challenges this year due to the lack of liquidity and the fast pace of new token launches. Kaiko's analysis shows that these tokens can have trading volumes that are much higher than their available liquidity, especially at launch.

For example, the TRUMP token saw $16 billion in trading volume on January 20 — nearly 30% of Bitcoin’s daily volume — despite having limited liquidity. This mismatch between volume and liquidity can lead to extreme price swings, forcing market makers to widen bid-ask spreads to manage risk.

Ultimately, this drives up costs for traders, making meme coins a high-risk, high-reward investment.

What’s Next for Meme Coins?

Even though meme coin hype has slowed this year, it’s far from over. Their mix of humor, community-driven support, and speculative appeal keeps attracting investors.

As exchanges adjust their listing strategies moving from “allowlists” to “blocklists” to better manage new tokens, meme coins will likely remain a key part of the crypto world.